Chapter 1: FInancial Statements Flashcards
(25 cards)
The information system that identifies, records, and communicates the economic events of an organization to interested users.
Accounting
A report prepared by corporate management that presents financial information including financial statements, notes, a management discussion and analysis section, and an independent auditor’s report.
Annual report
Resources owned by a business
Assets
A report prepared by an independent outside auditor stating the auditor’s opinion as to the fairness of the presentation of the financial position and results of operations and their conformance with generally accepted accounting standards.
Auditors report
A financial statement that reports the assets and claims to those assets at a specific point in time.
Balance sheet
Assets = Liabilities + Stockholders equity
Basic Accounting equation
An individual who has met certain criteria and is thus allowed to perform audits of corporations.
Certified Public Accountant (CPA)
Term used to describe the total amount paid in by stockholders for the shares they purchase.
Common Stock
A business organized as a separate legal entity having ownership divided into transferable shares of stock.
Corporation
Payments of cash from a corporation to its stockholders.
Dividends
The cost of assets consumed or services used in the process of generating revenues.
Expenses
A financial statement that presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time.
Income Statement
The debts and obligations of a business. Liabilities represent the amounts owed to creditors.
Liabilities
A section of the annual report that presents management’s views on the company’s ability to pay near-term obligations, its ability to fund operations and expansion, and its results of operations.
Management discussion and analysis (MD&A)
The amount by which revenues exceed expenses.
Net income
The amount by which expenses exceed revenues.
Net loss
Notes that clarify information presented in the financial statements, as well as expand upon it where additional detail is needed.
Notes to the financial statement
A business owned by two or more persons associated as partners.
Partnership
The amount of net income retained in the corporation.
Retained earnings
A financial statement that summarizes the amounts and causes of changes in retained earnings for a specific period of time.
Retained earnings statement
The increase in assets that result from the sale of a product or service in the normal course of business.
Revenue
Regulations passed by Congress in 2002 to try to reduce unethical corporate behavior.
Sarbanes-Oxley Act
A business owned by one person
Sole Proprietorship
A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time.
Statement of cash flows
